✅ The First $100k is the Hardest
FIRE BTC Issue #11 - Gradually, then suddenly
Last week, bitcoin reached $100,000.
It’s been an incredible journey to get here, and we’re just getting started. As one phase ends, another begins.
Consider this: How many people in your circle own any bitcoin? How many hold an amount that is a meaningful portion of their overall wealth? I’m guessing there are very few, if any at all.
And yet, here we are, all while bitcoin’s $2 trillion in total value still only represents less than 1% of global assets.
I believe this milestone represents a phase shift, where bitcoin adoption across the world accelerates.
The journey to $100k reminds me of the path to financial independence. Progress feels glacial at first. When I started my FIRE journey, my enthusiasm was high, but the daily progress felt like trudging through mud. Every small incremental bit of saving seemed inconsequential to the end goal.
After a certain point, however, the effects of the work you’ve been doing to save start to show. There’s an inflection point where the value of your portfolio moves substantially on a daily basis, which accumulates massively over the course of a year.
This is true with anything. Learning a new skill feels hard at first, but the work you put in compounds gradually, until suddenly it clicks.
“Gradually then suddenly” is a common phrase in the bitcoin world, popularized by my friend, Parker Lewis. You should check out his book.
Reaching $100k, whether for the growth of bitcoin or for the value of your FIRE savings portfolio, is an important bellwether. That’s when the suddenly part begins.
💪 Bigger is better
Now that we’ve reached $100k, the world has been put on notice. Bitcoin is here to stay, and its adoption will accelerate from here.
There’s an important concept in economics that can help us understand why: a Veblen good.
A Veblen good is a product for which demand increases as its price rises. If a good is seen as more desirable because of the higher price, it can lead to an increase in demand, rather than a decrease.
Examples of a Veblen goods include luxury items such as a Chanel handbag, a Rolex watch, or a Porsche 911 Carrera GTS. These items are strictly superior from a quality standpoint than most others in their respective categories, but they are sold at massive premiums relative to the difference in quality.
Bitcoin, as a monetary good, becomes more desirable to more people as the price increases.
Over the long term, bitcoin’s price is directly correlated to its size of adoption. Because there can be no supply response to an increase in demand, the price must go up as adoption increases.
And contrary to what you might think, the price going up increases its desirability, and therefore its demand. Why?
Monetary goods become more useful to more people as the size of their markets and the size of their networks increase. Price increases driven by greater adoption bring deeper liquidity and a larger surface area where bitcoin is accepted and held.
There are certain economic actors who have been unable to participate in bitcoin, not necessarily because of regulatory obstacles, but simply because the market for bitcoin has historically been so small. These market participants, such as large capital allocators, corporations, and governments, manage huge amounts of financial assets. They need deep liquidity in any asset class they enter.
With bitcoin’s increase in price, and therefore its liquidity and depth, these large actors can finally begin to participate and gain the benefits of the network.
A larger size makes bitcoin more desirable for small individual holders like you and me, too. As more people around us begin holding bitcoin and understanding the problems it solves, the utility of our holding increases.
Not only can we use bitcoin as a primary store of value, but we can begin to use it in exchange for goods and services. Business owners around us, recognizing the benefits of holding bitcoin, will find it advantageous to accept it as payment, and because more people hold it already, it is more likely they’ll find customers willing to pay with it.
It’s a win/win scenario, made possible by the increased utility provided by greater adoption and price.
💥 Leaving gradually, entering suddenly
So what does this have to do with your FIRE journey?
While it takes some time and intentional effort to reach that first $100k of saved value, the principles of "gradually then suddenly" apply just as powerfully to your personal finances. Just like bitcoin's network effect, a FIRE plan gains momentum through consistent effort and compounding returns. Each dollar saved builds upon the last, creating a snowball of wealth that eventually picks up incredible speed.
You’ll start to feel the impact your savings portfolio has on your ability to generate wealth outside of your job. At $100k, that effect becomes noticeable. At $1m, that effect becomes big. Beyond that, the compounding effect becomes massive.
A $1 million savings portfolio that grows by the stock market’s historical average of 8% in a year will generate $80,000 of new wealth for you. The current median income in the US just happens to be around $80,000 as well. If that’s your income, it’s as if you worked two years in one. Powerful!
With bitcoin, the average historical return is MUCH HIGHER than 8%. I compared stock market returns against bitcoin over the last 8 years in this previous issue of the newsletter:
🔑 Persistence is key
Early stages of building your FIRE portfolio can feel frustratingly slow.
Bitcoin’s first $100k took over 15 years to reach, and for those of us who have been around for the majority of that time, it’s been a tough grind. Meme-ing better money into existence and incepting it into the global consciousness is no easy task.
But the hardest part is behind us. The next $100k price increase will happen much faster, probably within the next year.
And when bitcoin hits $1 million, we’ll be able to say something similar: “The first $1 million is the hardest.”
That’s it for this week. Thanks for reading!
💡 Enjoyed this content? Share FIRE BTC with someone who’d love to learn about financial independence and bitcoin!
Until next week,
Trey ✌️
P.S. Unchained just released a new retirement calculator that incorporates bitcoin into its model. It’s beautifully dynamic and one of the best retirement calculators I’ve ever used. You can check it out here.
Disclaimer: I work for Unchained!